Found It !
 

Just found what I was looking for:

on www.bmw.com

The comparison between 2nd row configurations is evident.

Go to :

X5 2006 ( actually gives E70 model) > Experience > The New BMW X5 link above car > Design > Space Concept.

And then change the perspective....you get to compare how 2nd row changes due to 3rd row ( apart from obvious changes that I have seen )...e.g size of seats in 2nd row, spacing, style !

Sorry to bother you all with my dilemna but I know what I want now....

Persistence pays !;)

Now I remember the sales guy was right in saying that the 2nd row outer seats gain about an inch extra knee room without 3rd row option....from photos on the site he's right !

Yay! Good Job! I was also looking!
So don't you see, where the seatbelt is on the second row model, there is a continuation of the seat. Click to 3rd, and it's gone, to facilitate 3rd row access. Also notice the botton seat cusion also does this. And shouldn't this here recline the seats on a non-3rd er?

http://img263.imageshack.us/img263/7906/2nd3jc.png

No...thats to fold the seat flat forward..not for recline.
Third row adds different functionality to that handle...at least thats what I remember.

That should also recline if you push the seat back. That's what it did on the 3rd row model.
Actually, there were TWO ways to recline on the 3rd row model. the big handle on the side of the seat, and the pictured latch.
Are you sure that won't recline it?

Maybe Canada models are different?

Shouldnt be diff in Canada....yes the 2 handles are for 3rd row...I'll find out today when I go to the dealership.
Maybe someone else on this forum who doesnt have third row can answer this for us

Called dealership and spoke to my knowledgeable sale guy....he had a non 3rd row X5 in the showroom and checked....ITS FIXED and doesnt recline :(

OK...some more info...I checked onine and STANDARD FEATURE FOR USA lists:

Seats

• Driver Power Seat Adjusts 10 Ways Total
• Front Passenger Power Seat Adjusts 10 Ways Total
• Rear Split Folding Reclining Hideaway Bench Seat With Manually Adjustable Headrests and Fold-Down Armrest
• Front Dual Power Headrests
• Leatherette Seats
• Front Dual Reclining Bucket Seats With Adjustable Seat Height, 3-Position Driver Power Memory and Adjustable Headrests

How can this be???? Why would they make a different bench seat for CANADA????

Im stuck !

are you sure that isn't talking about the 3rd row? "Hideaway"? but it does say fold down armrest. Maybe the dealer guy in Canada dosen't know for sure. You can head over there and see for yourself I guess.

Found a dealership with both non and with 3rd row....will go and compare 2nd row config and see what is more comfortable...will try to take some pics for you too truex5er.